Daniel Raimi, Wesley Look, Molly Robertson, and Jake Higdon contributed to the report described in this blog post.
As the United States shifts toward a low-emissions future, coal, oil, and gas workers risk being left behind. With these communities in mind, Resources for the Future (RFF) is releasing its first in a series of reports that will help answer the following timely and pressing question: What tools are available to the federal government to help workers and communities navigate an energy transition? For an overview of the full just transition project, refer to our recent blog post that introduces the series of reports.
Digging into Federal Economic Development Programs
Today’s report—written by me, Wesley Look, Molly Robertson, and Jake Higdon (of the Environmental Defense Fund)—focuses on US federal government programs and policies that aim to spur local economic development. These programs could be valuable for communities that are looking to diversify their economies in advance of, or in response to, major changes brought about by deep reductions in fossil energy production and use.
We focus on two types of economic development programs: those that explicitly target regions where natural resources underpin the local economy, and those that have a broader geographic scope. Table 1 illustrates the major programs that we cover in the report.
These programs provide assistance to local governments, nonprofits, and private businesses through two broad tools: capacity building and financial support. Capacity-building programs help organizations help themselves by providing them with technical assistance, research support, and other skills that can help them implement successful local economic development programs. Financial support involves funding federal, state, and local programs through grants, loans, or other mechanisms.
Our review of these programs, and our examination of the empirical literature on their effectiveness, yields five key insights in the context of an energy transition.
First, we find that federal intervention can help support medium- and long-term economic development in numerous local contexts. The available empirical studies, while limited, show that both geographically targeted programs and those with a broad geographic and economic scope can lead to increased employment, greater business stability, and other local economic benefits.
Second, the existence of many federal, state, and local economic development programs means that any successful attempt to deliver a just transition will require substantial coordination across governmental bodies and with local stakeholders. A lack of coordination across federal programs has been highlighted as a potential challenge by numerous researchers, and recent efforts have sought to better coordinate and streamline the array of existing federal economic development programs.
Third, existing economic development programs can be augmented or redirected to support fossil fuel–dependent communities and workers, even if a given program was not originally designed for that purpose. Numerous programs examined in our report have offered support to communities facing economic challenges for over half a century or more. For instance, the POWER Initiative, which leverages an array of existing programs to deliver economic development and other programming in close partnership with energy communities, could be an important model for federal policy that invests in workers and jobs.
Fourth, federal programs explicitly targeting economic development are modestly funded, with just $80 million designated to support economic development in fossil energy communities, and most of those funds are distributed to coal communities. This level of spending would likely need to grow considerably to support the many workers and communities affected by deep reductions in greenhouse gas emissions across the US economy.
And finally, because deep emissions reductions will have geographically concentrated economic effects, policies supporting economic development in the most affected communities will most likely need to be geographically targeted. These policy interventions will need to be designed and implemented carefully. Some geographically targeted policies, such as the Secure Rural Schools program, have failed to support their intended beneficiaries (i.e., schools), and uncertainty over funding levels has created planning challenges for local governments, businesses, and residents.
In the weeks and months ahead, we will publish additional reports and accompanying articles on the Common Resources blog that consider different policy levers that the federal government might use to support local communities that may be negatively affected by a shift away from fossil fuels. Across our work, RFF is beginning to lay the groundwork for policies that treat workers fairly, avoid the most dramatic consequences of climate change, and create new economic opportunities for communities in need.